Question

Assume the price of a Big Mac in the U.S. is​ $5.99 and the price in...

Assume the price of a Big Mac in the U.S. is​ $5.99 and the price in Turkey is 29 Turkish Lira​ (TRY). Thus, according to PPP and the Law of One​ Price, at the current exchange rate the TRY​ is: A. undervalued B. Insufficient information to answer this question C. correctly valued D. overvalued

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Answer #1

Data provided here is not sufficient because the exchange rate would have been given in order to determine whether the price of big Mac in United States is undervalued or overvalued with comparison to its price in Turkish Lira.

To answer this question we will either need,inflation rate between both the countries or the exchange rate between both the countries in order to find out the purchase price parity.

Correct answer is option (B) insufficient data to answer the question.

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